Goldis bid for IGB not attractive, says PublicInvest Research

PETALING JAYA: PublicInvest Research is of the view that Goldis Bhd’s takeover offer for IGB Corp Bhd is not attractive as it represents a 56% discount to the revalued net asset value (RNAV).
“The corporate exercise is said to likely ‘eliminate holding company discount’, but we believe there are other ways to unlock value in IGB,” it said in a research note.
IGB shares rose as much as 40 sen or 16% to RM2.92 last Friday. At the market’s close, the counter was up 38 sen to RM2.90 with 3.46 million shares done.
Last Thursday, Goldis, the controlling shareholder of IGB, launched another takeover bid for the rest of IGB at RM3 per share after an attempt in 2014 at an offer price of RM2.88 a share.
However, PublicInvest Research is maintaining its “outperform” call on IGB with a target price of RM4.80 based on the 30% discount to its RNAV estimate.
The takeover bid allows IGB shareholders to choose one of three options: 100% cash; 30% cash + 70% Goldis shares; or 20% cash + 80% new redeemable convertible preference share options.
Based on 354.7 million shares held by the minorities, Goldis is expected to fork out up to RM1.1 billion, or about two-thirds of its market capitalisation. Goldis will be able to fund the cash portion via borrowings.
PublicInvest Research said a glance at IGB’s assets reveals that its 51.1% stake in IGB REIT is already worth about RM3 billion (which could be paid as dividends by distribution of IGB REIT shares) and the recent asset disposal alone raised about RM1 billion which effectively is enough to finance the takeover bid by Goldis.
“Besides, the group still owns other hotels and offices worth more than RM3 billion on our estimates that can be easily monetised,” it noted.